Scrap-rebar spread widens in India

Spreads between HMS 1&2 (80:20) and rebar widened in Mumbai and Chennai in mid-March compared to March 1. On March 16, by Rs1,250/mt and Rs1,500/mt, respectively, amid firm demand for finished steel. Finished steel prices in the period rose by Rs400/mt ex-Mumbai, but prices for HMS 1&2 (80:20) declined by Rs850/mt del Mumbai following weak global cues.

In Chennai, rebar prices rose by Rs1,500/mt ex-Chennai while HMS prices were rangebound to settle flat on March 16 at Rs29,375/mt del Chennai mills.

Mumbai and Chennai are also known for the consumption imported scrap due to their proximity to ports. But in the first half of the month, mills preferred to buy local scrap over imported due to the price difference.

In the North, mills faced a shortage of ferrous scrap which pushed up HMS prices. But demand from the end users remained sluggish keeping finished steel prices flat. The spread between HMS 1&2 (80:20) to rebar in Mandi Gobindgarh tightened by Rs550/mt. The Davis Index for HMS 1&2 (80:20) rose by Rs550/mt in the first half of March del Mandi Gobingarh. Since early this week, however, traders have called out a strike due to the ongoing GST issues which has affected the supply of ferrous scrap to furnaces. The strike could continue till Saturday.

In East India, the spread between HMS 1&2 (80:20) to rebar contracted by Rs500/mt. Prices could remain at current levels till the quarter ends. But mills expect a 3pc dip in prices in April. 

The index for HMS 1&2 (80:20) rose by Rs500/mt del Durgapur mills, on the other hand the index for rebar ex-works Durgapur settled unchanged at Rs43,500/mt on March 16 from the beginning of the month.